Non-domicile & offshore capital losses

What are the rules for using capital losses under the remittance basis?

This is a freeview 'At a glance' guide to non-domiciled taxpayers and offshore capital losses.

At a glance

From April 2008 non-domiciled individuals (non-doms) who claim the remittance basis have been able to elect to receive UK tax relief for capital losses on disposals of overseas assets.

A non-dom's overseas capital losses can then be set against worldwide capital gains. It may be that this election will prove very useful if a non-dom is facing a tax charge on, for example, Gains on foreign currency as this is a chargeable asset under UK Capital Gains Tax rules.

• The election is irrevocable. It applies for the year in which it is made and all future tax years.
  • The exception is if the individual becomes UK domiciled or deemed domiciled, when the election will cease to have effect.
• The election needs to be considered carefully, as it affects the order of set-off of gains, matching all capital losses against offshore gains (whether remitted or not), before UK gains.
  • Once the election is made there is no requirement that all foreign capital losses must be claimed each year; the individual can choose not to claim losses in certain years if this is beneficial to their overall tax position.
• Where the election is made, capital losses and the annual exemption are not available to be set against remitted gains from an earlier tax year.
• The election must be made within 4 years after the end of the tax year. An election for 2021-22 must be made by 5 April 2026.
• Individuals who have not claimed the remittance basis since the 2008-09 tax year can claim foreign capital losses without the need to make an election.

Small print & links

The election is dealt with by section 16ZA TCGA 1992.

The election deadline is in section 42 TMA 1970.

Useful guides on this topic

Remittance basis (overseas income)
What is the remittance basis? Who can claim it and when? What are the advantages of claiming the remittance basis and how much is the remittance basis charge?

Non-domicile status, deemed domicile & tax
Who is non-UK domiciled? What does this mean for UK Income Tax, Capital Gains Tax and Inheritance Tax? What reliefs are available to non-doms?